INTRODUCTION TO ECONOMICS I (İKTİSADA GİRİŞ I) - (İNGİLİZCE) Dersi Factors of Production and Factor Markets soru detayı:

PAYLAŞ:

SORU:

What happens when interest rates increase?


CEVAP:

The effect of an increase in interest rates on saving is ambiguous. An increase in interest rates causes saving to increase due to substitution effect but to decrease due to income effect. Since both effects work in opposite directions, the total effect is ambiguous.